The clash of political-titan advertising that usually results in sizable revenue during primary season was muted for everyone this year, to say the least. But the political dollars that have materialized helped make up for loses in core advertising at The E.W. Scripps Co. stations during the first quarter.
In fact, the company has increased its political estimates for the election cycle, based on expectations for a very heated back half of the year. That’s not only because of general election races, but also ballot measures related to reproductive rights, which could be substantial.
Those were just some of the topics discussed during the company’s earnings call with analysts this morning. Scripps executives also touched on the company’s process of selling the Bounce network; improvements in national and direct-response advertising; growth in distribution revenue; new blue-chip advertisers attracted to Ion’s women’s sports telecasts, and the company’s focus on paying down debt.
The entire company’s revenue for the quarter was up 6.4%, to $561 million, compared with the same period last year. The net loss attributable to shareholders was reduced by more than half: from a loss of about $31.1 million in first quarter 2023 to about $12.8 million in this year’s quarter.
Adam Symson, president-CEO, said: “As we move through the second quarter, we are seeing encouraging signs of improvement in national advertising at our networks in both direct response and scatter marketplaces. Our direct response business is higher year over year for the first time in two years. The decline in revenue from sports betting had softened national in the first quarter.
Scripps is now projecting that during the second quarter, revenue and expenses for the local media division will both be up in the low to mid-single digit percentage range. And the network division will have a revenue decline in the mid-single digit range, while expenses will likely rise by low-single digits.
Jason Combs, Scripps’ CFO, said that both gross and net distribution revenue are projected to be up in the low single-digit range this year. Agreements with distributors that are up for renewal this year represent a mere 5% of the company’s subscriber base.
First quarter results for the local media division — which includes a stable of more than 60 stations and their digital businesses — showed that core advertising dipped 3.4%, to $136 million. Political revenue helped make up for that, coming in at $15.2 million. And distribution piled on another $197 million, a 21% improvement.
In speaking of the core advertising category performance, Combs said that automotive rose 6% and home improvement increased 5%. “Services ended the quarter down slightly, but ended April up by double digits. Overall core revenue from local businesses was up slightly for the quarter while national advertising was down largely due to sports betting declines.”
Ballot measures related to reproductive rights are a key reason why Scripps has raised its projection for political spending. It now estimates that it will be somewhere between $240 million and $270 million. Initially, the company had forecast $210 million to $250 million. If it reaches the $270 million range, the company will top 2020 political results, when the last presidential race took place.
Based on political bookings so far, the company has “great visibility into the back half of the year, including I think CTV, which is a going to be a real great story for us,” said Lisa Knutson, COO.
The company is closely watching ballot measures related to abortion rights — those that have surfaced already, and those to come. “Our new guide of $240 million to $270 million now includes the impact of the Florida ballot measure,” Symson said. “Arizona is likely also to add a similar high-spend referendum to the ballot. And if that issue gets cleared onto the ballot in the Scripps states of Colorado, Missouri, Montana, and Nevada, we could see even more upside in our political revenue performance.”
Symson added: “It’s sort of conventional wisdom that abortion on the ballot is likely to motivate the [Democratic] electorate in a way that potentially Biden on the ballot does not. And so there’s the notion that abortion has the opportunity to create a more competitive environment for additional down-ballot races, opening up the opportunity for additional spending.”
The situation is a bit different in the company’s network division. It houses not only Bounce, but also Ion, Defy TV, Grit, Ion Mystery and Laff. Revenue declined 3.3% versus same period last year, to $209 million. The division’s profits also dipped, moving from $51.5 million in first quarter ’23 to $49.7 million in the most recent quarter ended.
On the positive side, scatter pricing is 40% higher than the upfront pricing established for the 2023-2024 season upfront. And direct response has grown stronger. Ad buyers’ positive response during the company’s recent upfront events will result in actual deals over the next couple of months. But based on the buyers’ reactions, Symson can foresee the possibility of upfront pricing for the fourth quarter to be in line with today’s scatter.
A key driver for Ion’s growth relates to women’s sports, both the WNBA and National Women’s Soccer League (NWSL). “We launched the National Women’s Soccer League on Ion in mid-March. And those games have been driving a younger and more affluent demographic to the network,” said Symson. “More than half of the NWSL viewers are new to Ion.” As a result of the audience reaction, Scripps has some new blue-chip advertisers, including Allied Financial, Gatorade and Meta.
“In addition, we’re capturing average unit rates for NWSL games that are 65% higher than our [rates] for non-sports Ion primetime programming,” Symson said.
As for the company’s intention to sell Bounce, which was announced last month: Symson said that it is in keeping with the company’s history of buying a business, growing its value, and then divesting. “The inbound interest that we’ve had has been strong. It was strong before the news of the sale process went public, and it’s really only gotten more robust.”
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